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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 2, 2022

 

REYNOLDS CONSUMER PRODUCTS INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware		001-39205		45-3464426
(State or other jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

 

1900 W. Field Court Lake Forest, Illinois		60045
(Address of Principal Executive Offices)		(Zip Code)

 

Registrant’s telephone number, including area code: (800) 879-5067

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

☐		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading symbol(s)		Name of each exchange on which registered
Common Stock, $0.001 Par Value		REYN		The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 

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Item 2.02. Results of Operations and Financial Condition

On November 8, 2022, Reynolds Consumer Products Inc. (the “Company”) issued a press release announcing its financial results for the third quarter ended September 30, 2022. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information included in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section and shall not be deemed incorporated by reference into any other filing under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise expressly stated in such filing.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Effective November 2, 2022, the Company appointed Judith Buckner as President, Reynolds Cooking & Baking and Chris Corey as President, Presto Products. In addition, effective November 2, 2022, the Company terminated the employment of Craig Cappel, the Company’s former President, Reynolds Cooking & Baking.

Ms. Buckner served as the Company’s President, Presto Products since 2019. She joined the Company in 2000 and has served in a variety of senior operational leadership roles. Prior to that, she held various engineering and leadership roles in product development and operations at Hoechst-Celanese/Invista from 1991 to 2000.

Mr. Corey joined the Company in 2019 and previously served as Senior VP International & Canada. Prior to that, he held various sales leadership roles at Kraft Heinz, Boehringer Ingelheim Consumer Healthcare and Johnson & Johnson.

Mr. Cappel will be paid severance under the terms of his Employment Agreement, which was filed as Exhibit 10.8 to the Company’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on November 15, 2019. In addition, the Company has agreed that 12,125 restricted stock units held by Mr. Cappel scheduled to vest in early 2023 will not be forfeited upon his termination, and instead will vest and be settled on the applicable scheduled vesting dates. The remainder of Mr. Cappel’s equity awards were forfeited upon his termination.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits

Exhibit No.		Description
99.1		Press Release issued by Reynolds Consumer Products Inc., dated November 8, 2022
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: November 8, 2022
		REYNOLDS CONSUMER PRODUCTS INC.
		By:		/s/ David Watson
				David Watson
				General Counsel and Secretary

 

 

Exhibit 99.1

 

 

Reynolds Consumer Products Reports Third Quarter 2022 Financial Results

Closed Gap Between Pricing and Cost Increases

Market Share Strong & Growing in Multiple Categories

Stepping Up Advertising & Promotion

Unlocking Additional Reyvolution Cost Savings

LAKE FOREST, IL, November 8, 2022 – (BUSINESSWIRE) – Reynolds Consumer Products Inc. (“Reynolds,” “RCP” or the “Company”) (Nasdaq: REYN) today reported results for the third quarter ended September 30, 2022.

 

Third Quarter 2022 Highlights

 

 

Net revenues increased 7% as pricing more than offset a volume decline resulting from slowing non-retail sales, elasticity and increased consumer activity outside the home.  Volume in many of our categories remains well above 2019 levels, driven by more cooking and working at home compared to prior to the pandemic.  The decrease in Adjusted EBITDA was driven by lower volume and higher SG&A as price increases fully offset increases in material, manufacturing and logistics costs.

 

“We closed the gap between pricing and cost increases this quarter while also building share and delivering earnings in line with our expectations,” said Lance Mitchell, President and Chief Executive Officer.  “Household foil trends also improved as we attained key retail price points, and Reynolds and Hefty gained share in multiple categories including household foil, waste bags and disposable tableware.  The economic environment remains dynamic, inflationary pressures continue and price elasticity continues to be uncertain.  However, our cumulative pricing actions, easing commodity costs and accelerating Reyvolution cost savings position us for substantial margin expansion in the fourth quarter and recovery of pre-pandemic profitability in 2023.”

Reynolds Cooking & Baking

Net revenues were flat, as lower shipments were offset by higher pricing implemented in response to increased material, manufacturing and logistics costs. The decrease in Adjusted EBITDA was primarily driven by lower volume and higher material and manufacturing costs, which were partially offset by price increases.  

 

Volume decreased 14% driven by lower non-retail sales and lower household foil shipments.

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Household foil consumption and Reynolds Wrap share trends improved in the quarter as we increased features and displays of foil, promotions to key price points were implemented, new digital promotions were offered and private label prices increased.  The Reynolds brand also gained share in certain adjacencies to foil during the quarter and continued to benefit from product innovations, including Reynolds Wrap Nonstick Foil, Reynolds Kitchens Air Fryer liners and Reynolds Kitchens Butcher Paper.  

 

Reynolds Cooking & Baking experienced unplanned equipment downtime in the quarter, impacting throughput of non-retail shipments and manufacturing costs and extending the timeline for reduction of higher cost aluminum inventory.  While most of these issues are temporary in nature, we are implementing operational changes to address all of them.

 

Hefty Waste & Storage

Net revenues were flat as pricing actions taken in response to increased material, manufacturing and logistics costs were offset by lower volume. Adjusted EBITDA increased 19% driven by price increases to recover higher material, manufacturing and logistics costs, partially offset by higher advertising costs.

 

Volume decreased 9% driven by elasticity and increased consumer activity outside the home.

 

Hefty gained additional waste bag share in the quarter, and waste bag usage continued well above 2019 levels as consumers continued cooking and working more at home.  Innovation was a major driver of market share performance including the launch of Hefty 4 & 8 gallon trash bags with new Ocean Water scent, further expansion of Hefty Fabuloso® 4 & 8 gallon bags and the following new e-commerce items:  Hefty Made-to-Fit trash bags and Hefty Slider Calendar Bags for better recording of refrigerator and freezer storage times.  

 

Additional waste bag pricing went into effect according to plan in September.

Hefty Tableware

Net revenues increased 28% driven by pricing to offset cost increases and accelerating volume growth. Adjusted EBITDA decreased 4% as higher volume was more than offset by price increases lagging increased material, manufacturing and logistics costs.

 

Volume increased 7% driven by sales of Hefty disposable plates and private label party cups and continued strength in the club channel.

 

Hefty gained additional share of disposable tableware in the quarter driven by Hefty plates, private label party cups and innovation.  Hefty ECOSAVE™ continued as a major contributor to growth, and Hefty Compostable Printed Paper Plates also demonstrated strong initial results.

 

Additional pricing went into effect according to plan in October.

Presto Products

Net revenues increased 3% driven by higher pricing implemented in response to increased material, manufacturing and logistics costs, partially offset by lower volume. Adjusted EBITDA increased 64% driven by price increases to recover higher material, manufacturing and logistics costs, partially offset by lower volume.

 

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Volume decreased 8% driven by lower waste and food bag usage.

 

Presto demonstrated continued private label leadership, increasing displays with major retailers, driving strong innovation including further adoption of stand and fill food bags and delivering strong back to school performance.  

Year to Date 2022 Highlights

Net revenues increased 8%, driven by higher pricing implemented in response to increased material, manufacturing and logistics costs, partially offset by lower volume.  Net income decreased 31%, and Adjusted EBITDA decreased 18%, reflecting lower volume, price increases lagging increased material, manufacturing and logistics costs and higher investment in advertising.

 

Balance Sheet and Cash Flow Highlights

Fiscal Year and Fourth Quarter Outlook

The Company now expects the following results for its fiscal year ending December 31, 2022:

 

 

The Company estimates 2022 cost pressures of approximately $525 million. Commodity rates are assumed stable versus end of October levels.  

 

The Company also expects the following results for its fourth quarter ending December 31, 2022:

 

 

“Our pricing actions and acceleration of Reyvolution cost savings programs continue to drive margin recovery,” said Michael Graham, Chief Financial Officer.  “The combination of these measures and easing commodity costs represents increasing flexibility to invest in our categories while also recovering margins.  We expect to recover pre-pandemic profitability in 2023 and are equally focused on improving balance sheet efficiency and maintaining capital spending discipline to drive additional cash flow.”

Quarterly Dividend

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The Company’s Board of Directors has approved a quarterly dividend of $0.23 per common share. The Company expects to pay this dividend on November 30, 2022, to shareholders of record as of November 16, 2022.

Conference Call and Webcast Presentation

The Company will host a conference call to discuss these results at 7:00 a.m. Central Time (8:00 a.m. Eastern Time) on Tuesday, November 8, 2022. Investors interested in participating in the live call can dial 877-423-9813 from the U.S. and 201-689-8573 internationally.

 

There will also be a simultaneous, live webcast available on the Investors section of the Company’s website at www.reynoldsconsumerproducts.com. The webcast will be archived and available for replay.

About Reynolds Consumer Products Inc.

RCP’s mission is to simplify daily life so consumers can enjoy what matters most. RCP is a market-leading consumer products company with a presence in 95% of households across the United States. RCP produces and sells products across three broad categories: cooking products, waste and storage products and tableware; that are sold under iconic brands such as Reynolds and Hefty, as well as under store brands that are strategically important to RCP’s customers. Overall, across both branded and store brand offerings, RCP holds the #1 or #2 U.S. market share position in the majority of product categories in which it participates.

 

Note to Investors Regarding Forward Looking Statements

This press release contains statements reflecting our views about our future performance that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including our fourth quarter and fiscal year 2022 guidance. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “intends,” “outlook,” “forecast”, “position”, “committed,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “model”, “assumes,” “confident,” “potential” or “continue,” the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial performance, our anticipated growth, management of costs and other disruptions and other strategies, and anticipated trends in our business, including expected levels of commodity costs and volume. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, including but not limited to the risk factors set forth in our most recent Annual Report on Form 10-K.

For additional information on these and other factors that could cause our actual results to materially differ from those set forth herein, please see our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K and subsequent filings. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. The Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

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REYN-F

Contact

Investors

Mark Swartzberg

Mark.Swartzberg@reynoldsbrands.com

(847) 482-4081

 

Media

Jessica Liddell

ReynoldsPR@icrinc.com

(203) 682-8200

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Reynolds Consumer Products Inc.

Condensed Consolidated Statements of Income

(amounts in millions, except for per share data)

 

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Reynolds Consumer Products Inc.

Condensed Consolidated Balance Sheets

(amounts in millions, except for per share data)

 

 

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Reynolds Consumer Products Inc.

Condensed Consolidated Statements of Cash Flows

(amounts in millions)

 

 

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Reynolds Consumer Products Inc.

Segment Results

(amounts in millions)

 

 

Components of Change in Net Revenues for the Three Months Ended September 30, 2022 vs. the Three Months Ended September 30, 2021

 

 

 

Components of Change in Net Revenues for the Nine Months Ended September 30, 2022 vs. the Nine Months Ended September 30, 2021

 

 

 

 

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Use of Non-GAAP Financial Measures

We use non-GAAP financial measures “Adjusted EBITDA,” “Adjusted Net Income,” “Adjusted Earnings Per Share,” and “Net Debt” in evaluating our past results and future prospects. We define Adjusted EBITDA as net income calculated in accordance with GAAP, plus the sum of income tax expense, net interest expense, depreciation and amortization and further adjusted to exclude IPO and separation-related costs. We define Adjusted Net Income and Adjusted Earnings Per Share as Net Income and Earnings Per Share calculated in accordance with GAAP, plus the sum of IPO and separation-related costs.  We define Net Debt as the current portion of long-term debt plus long-term debt less cash and cash equivalents.

We present Adjusted EBITDA because it is a key measure used by our management team to evaluate our operating performance, generate future operating plans and make strategic decisions. In addition, our chief operating decision maker uses Adjusted EBITDA of each reportable segment to evaluate the operating performance of such segments. We use Adjusted Net Income and Adjusted Earnings Per Share as supplemental metrics to evaluate our business’ performance in a way that also considers our ability to generate profit without the impact of certain items. We use Net Debt as we believe it is a more representative measure of our liquidity.  Accordingly, we believe presenting these metrics provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management team and board of directors.  

Non-GAAP information should be considered as supplemental in nature and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. In addition, our non-GAAP financial measures may not be the same as or comparable to similar non-GAAP financial measures presented by other companies.

Guidance for fiscal year and fourth quarter 2022, where adjusted, is provided on a non-GAAP basis. The Company cannot reconcile its expected Adjusted EBITDA to expected Net Income under “Fiscal Year and Fourth Quarter Outlook” without unreasonable effort because certain items that impact net income and other reconciling metrics are out of the Company's control and/or cannot be reasonably predicted at this time, which unavailable information could have a significant impact on the Company’s GAAP financial results.  In addition, the Company cannot reconcile its expected Net Debt to expected total debt without reasonable effort because certain items that impact total debt and other reconciling metrics are out of the Company’s control and/or cannot be reasonable predicted at this time, which unavailable information could have a significant impact on the Company’s GAAP financial results.

Please see reconciliations of Non-GAAP measures used in this release (with the exception of our fourth quarter, and full year 2022 Adjusted EBITDA outlook and our 2022 Net Debt outlook, as described above) to the most directly comparable GAAP measures, beginning on the following page.

 

 

 

 

 

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Reynolds Consumer Products Inc.

Reconciliation of Net Income to Adjusted EBITDA

(amounts in millions)

 

 

 

 

Reynolds Consumer Products Inc.

Reconciliation of Net Income and EPS to Adjusted Net Income and Adjusted EPS

(amounts in millions, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Reynolds Consumer Products Inc.

Reconciliation of Net Debt to Total Debt

(amounts in millions)

 

 

Reynolds Consumer Products Inc.

Reconciliation of Q4 2022 Net Income and EPS Guidance to Adjusted Net Income and Adjusted EPS Guidance

(amounts in millions, except per share data)

 

 

Reynolds Consumer Products Inc.

Reconciliation of 2022 Net Income and EPS Guidance to Adjusted Net Income and Adjusted EPS Guidance

(amounts in millions, except per share data)